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On Thursday, H.C. Wainwright analyst Andrew Fein adjusted the price target for Stoke Therapeutics (NASDAQ:STOK) to $35 from the previous $47, while still maintaining a Buy rating on the stock. Currently trading at $8.99, the stock sits well below analysts’ price targets, which range from $15 to $35. According to InvestingPro data, the company maintains a "GREAT" financial health score, with analysts expecting profit growth this year. Fein’s reassessment follows Stoke’s announcement that the Phase 3 EMPEROR trial is expected to commence around the second quarter of 2025. The trial will be pivotal in validating the Open Label Extension (OLE) data for zorevunersen, which is being developed as a potential first-in-class therapy for Dravet syndrome (DS).
Zorevunersen has the potential to stand out in the crowded DS market, which is currently focused on seizure reduction treatments. According to the OLE data, zorevunersen not only significantly reduces seizure frequency but also has a positive impact on patients’ behavior and cognition. The company’s strong financial position is evident in its impressive current ratio of 8.41 and minimal debt-to-equity ratio of 0.01, as reported by InvestingPro. The treatment involves a 70 mg loading dose followed by a 45 mg maintenance dose, which, in conjunction with background therapy, could lead to an 80-87% median reduction in seizure frequency over eight months.
Further bolstering zorevunersen’s profile are assessments from CGI-C, CaGI-C, Vineland-3, and quality-of-life metrics, which indicate improvements in behavior and cognition. These findings could be crucial if Stoke Therapeutics is able to replicate them in the Phase 3 trial, potentially enabling the inclusion of cognitive and behavioral outcome data on the drug’s label and distinguishing it from other DS medications.
Fein has revised the valuation model, lowering the price-to-earnings multiples and increasing discount rates to reflect current market sentiment, the heightened cost of capital, and a reduced appetite for early-stage clinical risk. This recalibration has led to the new price target of $35 for Stoke Therapeutics stock. The company currently trades at a P/E ratio of 10.18, with revenue growth forecast at approximately 4% for FY2025. Want deeper insights into Stoke Therapeutics’ valuation metrics and growth potential? InvestingPro subscribers have access to over 30 additional financial metrics and exclusive analysis tools.
In other recent news, Stoke Therapeutics reported a strong financial performance for the fourth quarter, with adjusted earnings per share of -$0.18, surpassing analyst estimates of -$0.55. Revenue for the quarter reached $22.61 million, significantly exceeding the consensus estimate of $4.1 million and marking a substantial increase from $2.8 million in the same quarter the previous year. Despite these positive results, the announcement that CEO Edward M. Kaye will step down overshadowed the earnings beat. Dr. Kaye, who has been with Stoke for seven years, will transition to an advisory role while remaining on the board of directors.
The company plans to initiate its Phase 3 EMPEROR study in the second quarter of 2025, with the first patient expected to receive a dose in the third quarter. Analysts at H.C. Wainwright reiterated their Buy rating for Stoke Therapeutics, maintaining a $47.00 price target, and expressed confidence in the company’s future prospects. The positive data from the Phase 1/2 trials of Stoke’s leading drug candidate, zorevunersen, has aligned global regulatory agencies, streamlining the pathway for future commercialization efforts. Additionally, a recent deal with Biogen (NASDAQ:BIIB), which included a $165 million upfront payment, positions Stoke to fund operations through mid-2028. These developments have set the stage for Stoke to potentially become a commercial-stage entity and a candidate for mergers and acquisitions.
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